Photo: Jim Watson, Agence France-Presse
Jerome Powell said Friday that in the face of inflation and modest to the “concerns” of the markets vis-à-vis an economic downturn, the Fed would be “patient” monitoring “how the economy evolves”.
The boss of the Fed, Jerome Powell, has strongly invigorated the markets on Friday, ensuring that the central bank would be “patient” on interest rates and reaffirming the independence of the institution.
At a conference in Atlanta (Georgia), Mr. Powell said that in the face of inflation and modest to the “concerns” of the markets vis-à-vis an economic downturn, the Fed would be “patient” monitoring ” how the economy evolves “.
“Monetary policy is not on a trajectory pre-established “, he added then that the average projections of the central bank shall provide for the instant two rate hikes of a quarter of a percentage point in 2019.
“We are always prepared to change the course of our monetary policy significantly, if necessary,” continued the president of the central bank.
In the wake of these statements, Wall Street, which had opened Friday in the green after good american employment figures, has significantly increased its up to the fence. The expanded index S&P 500 has gained 3,43 % 2,531,94 points and the Nasdaq, in high coloring technology, has won 4,26 %.
The european stock Exchanges have also been ragaillardies by these words, ending in a net increase.
Mr. Powell “has said exactly what the market wanted to hear,” summary Gregori Volokhine of Meeschaert Financial Services.
The boss of the Fed noted that recent economic data ” remained strong “, highlighting the strong job creation still announced Friday (312 000) for December, a peak in the last ten months, while the unemployment rate remains under 4 %.
The rate of unemployed rose to 3.9% in December compared to 3.7 % in the previous month, but for good reasons : more job seekers (more than 400,000) are presented on the labour market, in a sign of confidence in the economy.
“We also have wages that continue to increase gradually, which is welcome and which does not give cause for concern on the inflation front “, further stated Mr. Powell.
The average hourly wage rose 0.4% in December, its strongest increase since August, and 3.2 % year on year.
Trump against the Fed
The president Trump was warmly welcomed on Friday the “great figures” of the employment “have surprised a lot of people” and that ” they have obviously a strong impact on the stock markets “. “This has a lot to do with the return of companies on the american territory “,-he assured.
Earlier, Mr. Powell has, however, taken note of the “concerns” of the markets while the stock Exchange of Wall Street has shown itself to hyper nervous in the last few months.
He attributed the slowdown of the chinese people, exacerbated by trade tensions with Washington, the recent reduction in the growth of manufacturing activity in the United States, which fears that u.s. growth has reached a peak.
While he spoke alongside its two predecessors, Janet Yellen, and Ben Bernanke, Jerome Powell, has also vigorously defended the independence of the federal Reserve, which has been under fire from president Donald Trump.
“No,” was launched without hesitation Jerome Powell when he was asked if he would resign if the president of the United States asked of him.
Mr. Powell has been the object of very numerous attacks on the part of Mr. Trump, who accuses him of the interest rate hikes (four in 2018).
The host of the White House sees the increases in the monetary as an error detrimental to its economic policy, a view shared by many investors and economists who believe that the Fed does not see signs of a slowdown that starts to give the first global economy.
Mr. Powell stated that no interview with the president was planned at this stage, seeming to deny the press information according to which the councillors of Donald Trump would try to arrange a rendezvous between the two men to try to defuse the tensions.
The boss of the central bank took the opportunity to remind that the Fed had ” a culture very strong to be apolitical.”
He was immediately supported by Janet Yellen, who has expressed concern that critics of the president Trump “undermine confidence” to the central bank.
Hard beginning of the year
A long-time bubble, the stock markets have experienced a big hit in the last few months of 2018. The first week of the new year has offered another roller coaster ride, after that we learned in particular, the damage inflicted by the war trade rates between the United States and China on the chinese economic activity and, in turn, on the sales of iPhone of the american giant Apple.
On Friday, Wall Street, just as the financial markets across the world, have also benefited from the output of another central bank, China’s (PBOC) announced measures to support the economy of the country. The action of Apple, which had plunged 10 % on Thursday, closed up 4.2 %.
In Canada, the composite index S&P/TSX parquet floors toronto has gained 1.5% to 14 426,62 points and the canadian dollar has traded at an average price of 74,57 US¢, up from its average price of 74,02 ¢ from the day before. The last lifts were between other from the increase in the price of crude 87 cents US to 47,96 per barrel in New York, after a report had revealed that the u.s. supply of crude oil remained essentially unchanged.
With The canadian Press and The Duty